Toyota Prepares to Make Lexus Model at Georgetown Plant

by John Gregory | 07/21/14 10:16 AM

With an assembly line that has produced 10 million cars in the last quarter century, Toyota Motor Manufacturing Kentucky (TMMK) has made a substantial impact on the American auto industry and on the economic vitality of the commonwealth.

Wil James, president of Toyota's Georgetown facility, joined Renee Shaw on this weekend's edition of Connections to discuss what's next for the local operation.

In 2013, Toyota picked the Georgetown plant as the first American facility to manufacture its Lexus sedans. Production of the ES 350 model will begin in 2015.

How Kentucky Landed the Lexus
James says TMMK was selected for production because the Lexus is a perfect complement to the other cars built in Georgetown. The Camrys and Avalons produced here have a similar structural frame to the Lexus ES 350, which James says makes it easy to add to the assembly process.

Another key to landing the Lexus line, according to James, was a state economic incentive package totaling $147 million over 10 years. He says these tax incentives should pay off for Kentucky, just as the initial incentive package offered to Toyota to locate here did.

To facilitate the Lexus project, Toyota is investing an addition $375 million to expand the Georgetown facility. James says the entire project should create 750 new jobs.

Northern Kentucky Loses Toyota Jobs
The celebration of that expansion was tempered earlier this year when Toyota announced plans to close its engineering and manufacturing offices in Erlanger and move more than 1,000 jobs to Texas. One silver lining to that dark cloud is that about 300 engineering positions will transfer from northern Kentucky to Georgetown.

James says Toyota officials decided it was more efficient to consolidate its corporate operations in Erlanger, California, New York, and other locales to a new central location. He says Kentucky was not considered for the new headquarters because the company wanted a neutral site that didn't favor an existing operation. Texas Gov. Rick Perry also offered Toyota a $40 million incentive package to lure the company to his state.

Despite the loss of those jobs and the resulting blow to the northern Kentucky economy, James remains optimistic about the future of Toyota in the commonwealth. He says American auto sales have rebounded to near pre-recession levels, and that TMMK is perfectly poised to help meet consumer demand. The Georgetown plant can produce 500,000 cars a year; that capacity will increase to 550,000 vehicles annually once Lexus production begins. In addition to full automobiles, TMMK also manufactures more than half a million engines per year and nearly a million service parts each month.

"I don't think anybody has to worry about Georgetown going anywhere," James says. "I feel very comfortable and confident in saying that things will be good."